Obama under scrutiny for clues on deficit in speech

By IBT Staff Reporter On 01/25/11 AT 12:16 PM

President Barack Obama aims to rise above party politics in his State of the Union speech on Tuesday, but he must prove he is serious about tackling the budget deficit that could unleash a bitter partisan fight.

Obama, a Democrat, will begin his speech to a joint session of Congress at 9 p.m. EST (0200 GMT on Wednesday) and is likely to stress the search for common ground with Republicans to boost growth and jobs, shaping a centrist message to carry into his 2012 re-election campaign.

Americans have responded positively to better bipartisan cooperation after Obama struck a deal with Republicans over tax cuts, helping lift his approval ratings in recent weeks.

Washington's often harsh tone has also been tempered by efforts from both parties to conduct politics in a more civil fashion after a Democratic congresswoman, Gabrielle Giffords, was wounded in a mass shooting in Arizona on January 8. Six people died in the rampage.

The family of a 9-year-old girl who was among those killed have been invited to attend the address with first lady Michelle Obama, while some lawmakers plan to break the practice of sitting as a bloc with only members of their own party.

Americans are worried about a $1.3 trillion (822.1 billion pounds) budget deficit and rising federal debt, which will hit a statutory limit of $14.3 trillion by March 31.

The two parties differ over how to tackle these problems, with Republicans in favour of deep spending cuts and many Democrats preferring to increase taxes on wealthier Americans. Obama is under pressure to spell out his plans.

The president must focus on preparing the country for the need for a comprehensive fiscal consolidation package, said the Committee for a Responsible Federal Budget, a bipartisan organisation that focuses on issues related to fiscal policy.

There are so many things that we could really make significant cuts on, Republican Senator John McCain, who Obama defeated in the 2008 presidential election, told The Early Show on CBS.

Senior Obama adviser Valerie Jarrett said the president hopes to use the speech to convince Americans of his commitment to deficit reduction. But she said Obama also would emphasise strategic, targeted spending that's smart to address the more immediate priority of bolstering economic growth.

The message that's so important is that we do have to tighten our belts, Jarrett said in an interview on ABC's Good Morning America program.

But we also don't want to walk away from investments that are going to build and grow our economy. Ultimately, the private sector is the engine. That's what's going to fuel the economy and create the jobs of the future. And so what we don't want to do is anything that's going to have a chilling impact on that, Jarrett added.

Obama could also talk about raising the debt limit, a move that has been resisted by some Republicans but which is seen by investors as essential for the country to avoid defaulting on its debt.

But the U.S. president is expected to emphasise broader themes, like the importance to prioritize education, innovation and infrastructure investment while holding down non-defence spending, and leave the details to his budget next month.

CREDIBLE PLAN

Obama is unlikely to dwell heavily on the findings of a bipartisan deficit commission that urged a bold overhaul of the U.S. tax code, while promoting deep spending cuts that upset many on the left wing of his Democratic party.

David Walker, a former U.S. comptroller general appointed by former President Bill Clinton, said Obama must explain the deficit has risen due to emergency factors caused by the recession but also assure Americans he has a long-term plan.

He has got to acknowledge that trillion dollar deficits are a concern. ... But he has also got to explain most of it was due to temporary factors, and he needs specific proposals that are credible, said Walker, who heads an organisation called the Comeback America Initiative to promote fiscal discipline.

Obama says he will use the speech to talk about measures to boost U.S. competitiveness, jobs and growth, and deal with the deficit and debt in a responsible way.

With an unemployment rate of 9.4 percent and 14.5 million Americans counted as out of work, the White House wants to ensure any cuts in federal spending do not undermine the country's gradual economic recovery.

Obama said he would also appeal to Republicans, Democrats and independents, nodding to a shift in the balance of power after November congressional elections that has shrunk the number of Democratic lawmakers on Capitol Hill.

Republicans, who won control of the U.S. House of Representatives after campaigning for less government spending, have called for $100 billion in federal cuts.

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